Dive Brief:
- Wendy’s is adding chicken tenders to its menu later this year and plans to grow its beverage offerings — a move that mimics McDonald’s recent menu plays following similar sales struggles, Ken Cook, Wendy’s interim-CEO and CFO, said on the chain’s earnings call.
- “This summer, we learned that when we have too many priorities, we have none,” said Cook, who has served as interim-CEO since mid-July.
- The chain suffered from a sales slump in Q2, with same-store sales down 3.6% in the U.S., according to its Q2 earnings release. Cook said that poor performance was partially the result of an unfocused promotional strategy in the spring and summer.
Dive Insight:
Wendy’s summer promotional lineup proved a problem for the chain’s operations, and is partly responsible for its new menu focus, Cook said.
“Our 100 days of summer programming included promotions on beverages, breakfast meal deals, digital exclusives, our Takis collaboration and more,” Cook told investors on Friday. “This looked great on paper, as it had something for everyone. However, the volume of initiatives made it challenging for our restaurant teams to execute.”
To combat this, Cook said Wendy’s is simplifying its marketing and promotional calendar in Q3 and Q4. The chicken tenders will launch in Q4 and be accompanied by six new sauces, including a sweet chili sauce. The move mirrors McDonald’s chicken strategy: When the McCrispy Strips debuted in May, the Golden Arches accompanied them with a new creamy chili dipping sauce. The new Wendy’s signature sauce, which Cook described as possessing a tangy kick, seems to bear a superficial resemblance to Popeyes’ recently launched Signature Sauce.
Wendy’s tenders outperformed competitors including some chicken-focused concepts in testing, Cook said in response to analyst questions.
“Obviously, it's been a very fast-growing protein within QSR, and we really like how our product stacks up against the competition,” Cook said, adding that the tenders category will give Wendy’s a platform with which to experiment on more chicken offerings. Both Taco Bell and McDonald’s have used their recent crispy chicken menu additions to launch new products this year, including Crispy Chicken Tacos and Snack Wraps, respectively.
On the beverage front, Wendy’s is adding premium cold brew coffee with cold foam, and sparkling energy drinks in Pineapple Citrus and Cherry Limeade flavors. Those energy drinks will be available from the brand’s Coke Freestyle machines, Cook said, which avoids the operational complexity some other brands have seen from premium beverages. Overall sales of sparkling energy drinks in QSRs have risen 50% year over year, Cook said, making the category a major opportunity to drive snacking daypart sales.
The chain’s cold brew additions will likely generate some snacking sales as well, but Cook said the coffee innovation was intended to bolster breakfast.
“Customers are deeply habitual in the morning and behaviors often center around beverages,” Cook said. “Over the past several years, coffee preferences have shifted towards cold brew as approximately 40% of QSR coffee servings are now cold.”
